RunKeeper CEO: Dedicated trackers are headed the way of the digital camera

More and more fitness devices are flooding the market, but Jason Jacobs, CEO of RunKeeper, thinks they are on a “road to nowhere.” In an onstage interview with Xconomy editor Curt Woodward at the publication’s Mobile Madness 2014 event in Cambridge, Massachusetts yesterday, he talked about how he sees the space changing.

“We built this app for the phone and then we saw all these wearables come out in the early days … then an obscene amount of them starting coming out,” he said. “And from an end user standpoint, people weren’t using them. Even those that bought them, after a few months they were sitting on the bureau or put through the washing machine and, meanwhile, the phone we were built on kept getting better and better. It had more sensors on it, the battery life was getting longer, it was getting faster, it was getting more durable, the form factor was getting more fitness friendly.”

Jacobs compared dedicated fitness trackers to cameras and music players — two devices that seemed like they would have a long life as standalone products, and are now relegated to a niche market in the face of integrated smartphones.

“What we started to notice was this fitness-specific hardware was on a road to nowhere, because over time it’s on a path to commoditization and how can they possibly maintain these margins when there’s less and less differentiation and more and more players in the market?” he said. “So from a focus standpoint, we’re squarely focused on being the software that powers the fitness component of phones and, in general, wearables. And while we still plan to integrate with the third party inputs, we don’t think the standalone devices that are fitness specific are the vehicle that is going to take this stuff to the mass market. We think it’s going to be the phone.”

The Boston-based fitness app company has recently reached 30 million users, according to Jacobs. Responding to a question about Apple’s rumored Healthbook and Google’s Android Wear signaling a possible entrance into the space by those companies, Jacobs talked about RunKeeper’s history.

“When we started, people thought our company was a joke,” he said. “‘Fitness is a niche.’ ‘You can’t build a consumer company in Boston’, on and on and on there were all these reasons why we didn’t stand any chance of success, and not only did we not stand any probability of success, but the category we were operating in wasn’t interesting to anybody. Then it was: ‘How are you going to compete with the 50 other people who do run tracking?’ Then Nike showed up and it was ‘Oh my God, how are you going to compete with Nike?’ And so now it’s Apple, Google, Samsung, everybody’s pouring money in, the biggest companies in the world from a technology standpoint are pouring money into this category. As an entrepreneur, while that may be scary, that is immensely validating. If we got scooped every time a big company entered our category over the last 6 years, we’d be dead 52 times by now, and nobody’s killed us yet.”

Jacobs attributes that resilience partly to RunKeeper’s strategy of being a motivational tool that sits on top of data collection and feedback tools, rather than hanging its hat on data collection and feedback itself. He also acknowledged that the company has a strong brand, which helps keep the company relevant.

“We have people who have gone three or four months without using the product, but if you ask them about RunKeeper, they’re fierce brand loyalists,” he said. “So it’s kind of a unique category in that way. You stop using Facebook for six months, you’re probably sick of Facebook. But 60 percent of people that turn away from RunKeeper are turning away from working out. And as soon as they get back into working out, they run right back to RunKeeper.”

Finally, Jacobs talked about some of RunKeeper’s future plans, which include using more data to keep users motivated. He said the app will eventually combine data about users, aggregate data about similar users, and data about the environment to generate highly personalized, specific action plans.

“If we know that you’re supposed to run 10 miles tomorrow or today and we know your schedule and we know that it’s raining outside, we also know when it stops raining,” he said. “Or we don’t today, but we sure could, the technology’s there. Right? So what if we pinged you and said ‘Hey it stopped raining, might be a good time to get in that 10 miles,’ since we know you have 2 hours free in your schedule? It’s scary, but it’s incredibly powerful if harnessed for good.”

The concept of integrating external data streams to create an intelligent app experience is brilliant.

I’d say it’s absolutely accurate that the wearable hardware space is becoming commodified. As Jason alluded to this exact thing happened in MP3 players. That was before the iPod was released and change everything. Look for major disruption once we see an iWatch and closed platforms like Jawbone and FitBit are forced to open up SDKs for external developers.

Overall great comments. Thanks, Jonah.

daviddoherty

I think a lot of the consumer interest and value is related to the impression it makes when you wear a tracker eg. it makes you look sporty, acts as a reminder for you to skip on the desert and take a walk at lunch, etc.

But the reality is motion trackers had already converged with mobile phones long before dedicated mobile phone connected trackers came to the market.

It’s not always easy to see this change as not all mobile markets innovate at the same pace but look to Japan where even the most basic mobiles (eg. Raku Raku mobiles) used by millions of senior citizens have had inbuilt pedometers for 5+ years. There are more senior citizens tracking their activity with the native pedometer app in Japan than there are people in the world who’ve got (or lost) a mobile connected fitness tracker.

The same actually happened with music playing phones eg. sales of music playing mobiles outstripped sales of dedicated music players (like iPods) before Apple even announced the iPhone (top mobile analysts used this fact to predict that Apple would have to become a mobile brand even after their first failed attempt with the Rokr).

http://www.theroadtosiliconvalley.com/ Ernest Semerda

Jason you nailed it. The type of sensors present in those wrist devices now lives inside our phones. No need to be wearing multiple bracelets.

Furthermore, it is more costly & slower to be innovating a hardware device then focusing on software (that can run on a host of devices) and brand.

In the future we will only have 1 device (aka a computer in our pocket) capable of many things through software. Where this device might lack a sensor it will use proximity devices sensors (i.e. sensors in your clothes/accessories) to fill in the blanks to paint a picture of your health, environment etc.

Yasaman

Jason – Thanks for the write up. Although I agree that wearable market is getting fiercely competitive, and it would be harder to have high margins on the products over time, I’m still super optimistic about this whole category. The reasons are below:

1) Maybe over time, the hardware piece of these devices become less of differentiating factor, but don’t forget that short term still the best design could win hearts and market share.

2) Market share in a category like this is significantly important. Because market share correlates with network effect. As currently the wearable market stands (fragmented and not a single platform for data integration) network effect means WINNING.

3) This quantified-self device is what people will wear all day / all night (this is different than camera or even you phone). Design matters, and matters a lot. In addition to technology, functionality, and data collection capability, design of the wearables needs to be aesthetic and appealing. What wearable you wear is part of your fashion statement (that’s why all these big companies including Apple and Google hired top folks from design and fashion industry. Although functionality will be more important than just design, design and actual hardware will continue to be a differentiating factor.

I should say that it’s totally true that when I’m not using my Runkeeper app it’s when I’m failing to run as often as I should. As soon as I start running. Runkeeper is back on.

everydayfella

I had to laugh out-loud while reading these comments by Jason Jacobs… He talks about the commoditization of HW as though there has been no commoditization of software. Runkeeper is just one of many. What can be said about competition between hardware companies such as Nike, Jawbone, Fitbit can be equally said about competition between big data software companies such as Map My Fitness, Endomondo, and Runkeeper.

Does Fitbit go in the sock-drawer after a few weeks. Hell yeah! But so does Runkeeper. The difference is that Fitbit generates $100M+ in revenue a year with just a fraction of the customers of Runkeeper.

The problem with Jacob’s comments is that they ignore that wearables are… well… just different. From a hardware perspective, you can measure activity via a phone, but you can’t seamlessly measure biometrics (heart rate, respiration rate, blood pressure, etc.) from a phone. Yes, there are these lamesque smartphone applications that require you to sit still for several minutes to get one reading, but an accurate description of health requires multiple readings at multiple times of the day throughout multiple activities. Phones just can’t do that without taking a person way outside of their normal routine to stop, hold their finger, and wait (for tens of seconds at least). And consumers simply aren’t buying-in to this type of forced lifestyle change.

From a software perspective, Jacob’s comments ignore the fact that there are no viable use cases currently existent that justify the long-term use of current smartphone apps — there are no “killer applications” that keep enough people using a fitness tracking app over a long enough period of time to be meaningful. Namely, how do I improve my life by uploading data into a big-data software platform? This is an industry problem that is not only limited by the lack of seamless biometric HW and SW but is further limited by the lack of proven meaningful, actionable relationships between biometric data and lifestyle choices. And no matter what the “killer apps” may ultimately be, it’s difficult to imagine these use cases will be realized without seamless (natural, autonomous, and unobtrusive) monitoring of vital signs in context of activity state — and that’s something a smartphone touchscreen just can’t do.

I’m still waiting for Runkeeper (and others) to give me one reason example of how they can improve my health by loading data into their platform… Am I the only one waiting? Though a bit jaded, I still believe the use cases must be there, but I believe that the granularity of data required to realize these use cases doesn’t yet exist. And so I want the Fitbits of the world to keep working on biometric sensor technology that makes Runkeeper worth something.

jeremy

I won’t be trading in my Garmin 305 for anything smartphone-based, simply because the power-drain on the mobile due to contnuous GPS use flattens the battery well before I can finish a marathon (and I’m an under-3:30 runner). I also find smatphone apps ludicrously hard to use on the run (reading stuff upside-down from a device strapped to your upper arm is hard enough – coordinating touchscreen presses in this context is nigh-on impossible at pace). Sorry, Jonah – disagree strongly with you about this.